#FTCcrackdown: What Brands Need to Know about Using Influencers to Advertise their Products
Lexology
Foley & Lardner LLP

Social media influencers have become one of the most effective channels for companies to reach and engage with their target market online. So far in 2017, marketers have spent over $1 billion to have influencers post Instagram photos marketing their products. Last year, marketers spent $576 million. Because of the increased popularity with this new form of marketing, the FTC has begun to crack down on these influencers and the companies using the influencers to market their products online.

The FTC’s Endorsement Guides outline the requirements influencers must follow when making paid social media posts and endorsements. Among these guidelines, the FTC requires an influencer endorsing a product to clearly and conspicuously disclose any material connection between the influencer and the manufacturer, company, or brand. A material connection may be established by a business or family relationship, monetary payment, or the gift of a free product. These rules do not just apply to the influencers but the marketers as well.

A recent study by Mediakix found that of the top 50 most followed celebrity Instagram accounts only 7% of their collective posts were FTC compliant. Manufacturers in the fashion industry are especially vulnerable to potential FTC violations, with fashion product endorsements constituting 61% of the influencer posts Mediakix analyzed.

Due to the number of violations, the FTC sent out more than 90 letters to social media influencers, manufacturers, companies, and brands reminding them of the disclosure requirements. The letters warned influencers that simply posting endorsements with a “#sp,” “#spon,” “Thanks [Brand],” or “#partner,” were not sufficiently clear. Additionally, the FTC advised influencers to make disclosures of any material connection above the “more” button and to avoid multiple hashtags or links as they are likely not sufficiently conspicuous.